This article has been updated from a previous version.
When independent living becomes too difficult or unsafe, many seniors opt to move to an assisted living or long-term care facility.
Assisted living facilities – or retirement residences – often provide some support with meals or housekeeping, while long-term care facilities generally offer around-the-clock medical care and nursing support.
This transition can be challenging, especially when it comes to insurance. Often, seniors in these facilities sell their houses or condos and go from homeowners to tenants, meaning they no longer need a traditional home insurance policy.
So, what type of insurance coverage is best for a senior in this situation? Generally, tenant insurance will do just fine, but there are a few cases where it won’t be adequate, and additional coverage will be needed
How does insurance work in long-term care and assisted living?
Some facilities will provide their own overarching policy for all tenants, called a master policy. However, this isn’t universal - Nor is the requirement for residents to even have insurance when moving into a long-term care or assisted living facility.
To complicate matters, insurance in a senior living community differs somewhat from long-term care or assisted living facilities. Sometimes called retirement villages, retirement condominium communities, or adult lifestyle communities, the residents of these facilities own their properties.
Therefore, it’s up to the individual to inquire about their long-term care centre’s specific options.
However, most of the time, seniors in long-term care rely on tenant insurance. A standard tenant insurance policy should cover all of a senior’s possessions at a long-term care or assisted living facility.
Tenant insurance encompasses a few different types of coverages, but the main one to be aware of is contents coverage, also called personal property coverage. It protects your belongings like furniture, clothes, electronics, and other valuables from risks such as theft, fire, and damage. This coverage is usually part of homeowners, renters, and condo insurance policies.
After all, many residents arrive at these facilities without all the furnishings they had in their homes.
This type of coverage guarantees that the seniors’ personal belongings are protected against risks such as theft, fire or damage.
“You might be talking about, depending on the facility, your clothes, maybe some limited furniture, pots, pans, glasses, or kitchenware,” says Rob de Pruis, national director of consumer and industry relations at the Insurance Bureau of Canada.
Having tenant insurance is also important because it mitigates the costs of replacing damaged or stolen items, which can be quite expensive, particularly for seniors on a fixed income.
Read more: How much are your possessions worth? Make sure your home insurance policy has you covered
Additional coverage and costs
If you’re a senior with items in a storage facility, they will be protected through standard personal property coverage (home insurance, condo, or tenant insurance) for about 90 days or the length of the policy, whichever is shorter. For longer storage periods, consider a self-storage policy.
The good news is that tenant insurance coverage is affordable. Derek Faulconer, regional manager at Westland Insurance, said these tenant insurance policies could cost as little as $300 to $400 a year. In some cases, tenant insurance could cost as little as $15 a month, depending on your coverage needs.
And de Pruis says some tenants' insurance policies have a $10,000 content limit, which may be more than enough for a senior moving into a facility. More expensive belongings, like jewelry, may require endorsements to cover them.
Still, an insurance policy can bring tenants peace of mind and protect their personal belongings should the worst-case scenario happen.
How seniors can obtain contents coverage through their adult children
Seniors might be able to obtain personal property coverage for their belongings if their adult children hold homeowner’s policies of their own.
Stefan Tirschler, senior policy analyst at Insurance Council of BC, says this extension, which allows seniors to obtain contents coverage through their adult children, exists under most homeowner’s policies.
“Even if you’re a condo owner, you’ll probably see a similar extension in there for the benefit of your parents.”
However, Tirschler says such an extension might not cover all the expenses a senior could incur should a fire or flood destroy their home.
For example, unlike a typical tenant insurance policy, personal property coverage wouldn’t compensate for the cost of living in a hotel while waiting for repairs.
“In that case, you would want to ensure that you arrange dedicated insurance with additional living expense coverage at that location,” Tirschler says.
Related: Why You Need Renters Insurance
What insurance do seniors need in retirement communities?
Seniors who own a property in a retirement community would also need to keep paying their mortgage, property taxes, and utility bills. In these cases, contents coverage alone won’t be sufficient — they need a proper homeowner’s policy to cover any potential damage to their home.
This insurance generally covers the structure of the home, personal belongings, liability and additional living expenses if the home becomes uninhabitable.
“If they own their unit,” Tirschler says, “then they’re exposed to the same things a condo owner may be, like assessments for water damage and all that fun stuff.”
And because they do own their own units, senior living community residents can’t piggyback on the home insurance policy of their adult children, as explained above. “They would need their own separate policy,” de Pruis says.
The right insurance policy can fill any gaps in coverage
Reading the fine print on any contracts for a retirement home, long-term care facility, or assisted living facility is critical.
Another consideration is whether residents share accommodation in a facility — meaning their belongings may be less secure than in a traditional apartment.
de Pruis also recommends regularly reaching out to an insurance representative, so seniors or their caregivers aren’t surprised by any of life’s circumstances.
“There’s coverage for every stage of life that’s readily available throughout the country,” he adds.
Knowing the insurance options available helps make sure seniors are well-covered and can feel secure in their new homes.
Read next: How to prepare your home for aging in place
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